North Vancouver Distressed Homes

What Is a “Distressed” Property?

In Real Estate terms, a “distressed” property typically refers to characteristics of the property that are unusual and nearly always have a negative impact on the fair market value of the property.

Examples of distress might be an unfavourable environmental profile (i.e. old gas stations); a long abandoned or long-vacant single family home; a run-down, tenanted property or a property where a Lender is “foreclosing” on the existing Owner of the property.

On our eCo Realty Inc. websites, the reference to “Distressed Properties” refers only to properties that are in foreclosure.

So How Do Foreclosure Sales Work?

A bank, credit union or other financial institution usually gives the Owner of a property and the Grantor of a mortgage 3-4 months notice that foreclosure proceedings will be commenced in order to recover funds lent to the Owner to purchase the property. Usually an Owner must have been 3 months in arrears on the mortgage payments before the notice is given.

If the Owner is unable to sell the property themselves or otherwise bring the mortgage into a “current” status, then the financial institution will apply for the “Conduct of Sale” of the property, granting official approval to sell, and if successful, will then list the property for sale on the MLS® system.

The company that lists the home for sale must respect certain rights of the Owner by providing sufficient notice to show the home, refraining from Sunday showings and so forth. Sometimes it is not as easy to view a foreclosed property, so prospective Buyers may need to be a bit more patient than they would with the sale of a regular property.

All foreclosure listings are offered on an “as-is, where-is” on the date of possession basis, because the financial institution is not prepared to make any representations as to the condition of the property. Sometimes the property is left in a particularly bad condition by the “Owner” because of their anger at losing their home. The Buyer must be prepared for that eventuality.

Foreclosure listings apply only to the property and its “fixtures”. No chattels, such as appliances, curtains, shelving units, and the like can ever be included in the offering. Private arrangements to purchase such items can be made between the Buyer and Owner if so desired.

And so, you have now viewed the property, you have determined that the property suits your needs and that it is being offered at a reasonable price. What do you do now?

Submitting Your Offer

Your REALTOR® prepares an offer, called the “Contract of Purchase and Sale” on your behalf. It may have the typical subject conditions such as Financing, Inspection, Title Search, but must also have a subject clause making the contract “Subject to the approval of the British Columbia Supreme Court.”

Your offer is submitted to the Lender or solicitor acting for the Lender, and it is negotiated back and forth in the normal manner. Counter-offers with respect to price or other terms may be proposed until an “acceptable” offer is achieved.

You then execute due diligence by having a mortgage appraisal performed, inspection carried out, title verified, and so forth until you are satisfied that the property will serve your purposes.

You then remove your subject conditions in writing, which leaves “Subject to the approval of the British Columbia Supreme Court” as the only remaining condition. At this time, you would be expected to provide a deposit, in the form of a bank draft, for at least 5% of the offered price. This deposit would be paid to your Buyer Agent in Trust and will form part of the purchase price.

Awaiting Approval

Now that the solicitor for the Lender has your relatively “unconditional” offer in hand he or she will apply to the Court for a date at which time the offer can be presented for its approval. This date is usually 10-15 days after you remove subject conditions and pay your deposit.

On the date that the Court agreed to hear about your offer you would attend with your Buyer Agent at the stipulated location. There is a list in the lobby of the courthouse that indicates in which courtroom your offer will be heard by the judge or master. Also on that list may appear the price that is in your offer.

This may seem a bit unfair, but it is the Court‘s job to protect the “Owner” to greatest extent by making sure the highest possible price is received for the property.

It is also important to understand that your offer must be somewhat close to the Fair Market Value of the property. The Court will not automatically approve any offer just because it satisfies the Lender; its role is to insulate and protect the foreclosed upon “Owner” to the greatest reasonable extent.

At this time, it is common for the Listing Agent or solicitor to meet outside the courtroom with other parties that might be interested in the same property that you have offered on. The lawyer representing the Lender will then collect any other offers on the property and prepare them for presentation to the judge or master. At this stage, you are also able to amend your original offer, which is why you and your Buyer Agent REALTOR® need to be at the Courthouse. There are not always other “bidders” present but you must be prepared for that eventuality.

Once all bids are in, the judge or master reviews the offer or offers, listens to the recommendations of the Lender‘s lawyer and makes a determination as to which offer the court will approve. Hopefully, it will be your offer that is accepted.

Normally, the existing “Owners” will be given 30 days to vacate the property, but sometimes the Courts will be more lenient and allow up to 60 days.

From this point on, the transaction unfolds in the normal manner.

Metro Vancouver distressed properties for sale

If you would like information on distressed properties or foreclosures in Metro  Vancouver, British Columbia, please complete the form below and we will send you the information. Search Greater Vancouver and Fraser Valley Listings for sale.